I am a UK-based business journalist and author, specializing in start-ups, fast-growth companies, corporate finance and online marketing. My career began in the late 1990s when I was appointed Business Editor of BBC World Television’s European teletext service. From there I went on to edit two magazines – e.Business and PLC Director – before going freelance in 2003, focusing, in particular, on SMEs and technology companies. Since then, my work has appeared in the national press, a broad range of magazines and online. I am the author of three books, including the Unauthorised Guide to Business the Jamie Oliver Way (Capstone), which has been translated into five languages since its publication in 2011.

Steering A Course Through The SME Valley Of Death

If you want to draw attention to a problem, coining a memorable phrase to describe it probably constitutes a good first start. And as I discovered last week when travelling round California in the company of officials from Britain’s Technology Strategy Board and UK Trade and Investment on the Robots and Autonomous Systems Trade Mission, the expression “valley of death” is rather popular just now.

It’s a term that relates directly to one of the big problems facing the UK economy. For all the acknowledged excellence of its science base, the UK tends to underperform when it comes to commercially exploiting the work of researchers. Or to put it another way, on the road from the lab to the marketplace, too many inventions are lost in a “valley of death” which is located on the map somewhere between seed funding and the first round of VC finance.

Arguably VoD syndrome is a particular problem for technologists whose goal is to create good-old-fashioned three dimensional products, as opposed to, say, software solutions. For the truth is that from prototype to commercial production run, developing physical objects – particularly those based on ground-breaking science or research – is expensive and therefore high risk. With technology-savvy investors relatively thin on the ground – particularly when compared to the US – it’s all too easy for fledgling technology businesses to find themselves in the aforesaid valley of death, without access to the resources that will steer them through to the other side.

Technology Strategy Board officials like the “valley” analogy because, a big part of their role is to deploy a range of grant funding tools to help science based businesses commercialise their products.

However, one of the heartening aspects of last week’s Robotics and Autonomous Systems Trade Mission to the US was seeing at first-how a range of start-ups and early stage companies were finding their own strategies for funding commercialisation.

Crowdfunding

For companies at the a very earliest stage of development crowdfunding is emerging as a means to get up and running, not least because rewards based schemes provide a means to raise cash without giving up a chunk of equity.

That’s the course taken by Agilic, start-up established in 2014 and based in the Bristol Robotics Lab incubator. The company aims to produce educational robot kits powered by the Raspberry Pi computer and founder Harry Gee sees a campaign on Kickstarter (target $27,000) as critical to his plans. “It’s a way to get the project up and running without getting into debt or taking equity,” he says. “It’s also a good way to create a buzz. “

Self-Funding

Another strategy is by funding the development of new technology through an alternative revenue stream. Based in County Durham, Aurotech is developing a Remote Operate Aerial Endurance Vehicle with a flight time of around 12 hours. Low mass batteries are they the key to flight time endurance. As CEO Eamonn McStravick explains, the company is also a design consultancy working on undersea unmanned vehicles for the oil and gas industry and this source of ‘paid’ income subsidises the technological development work on the vertical take-off endurance vehicle. This income provides a way to de-risk the hardware development side but it can also, as McStravick acknowledges, place limits on the pace of development. “As a small company work the consultancy work means you have less time to spend on development,” he says.

Finding Early Adopter Customers

Shadow Robots – one of the poster children for the UK robotics industry – was also on the trade mission. Using a system of sensors, Shadow has produced a robot hand that can manipulate objects with similar sensitivity to its human counterpart. Shadow has established an international profile and a customer base. “We sell primarily to university research labs,” says Managing Director, Rich Walker. “That’s a great market to have but we want to move beyond that.”

Walker sees a wealth of industrial applications for a robot hand that is capable of, say, picking fruit without damaging or crushing it in any way. But there are real challenges. A shadow hand on the end of an industrial robot arm could revolutionise fruit picking but only if the price of the kit is viable for the economics of the industry. That means addressing the future development of the hand and addressing potential markets through the lens of production processes that can bring down manufacturing costs.

And the upshot is that for businesses working with limited resources, each funding solution is just another step to the next funding round, partnership or customer win. In that respect, high profile events such as trade missions provide a vital shop window to attract partners, finance and potential customers.

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